Growth and Development of Famous Army Stores: A Business Report

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GROWTH AND DEVELOPMENT OF THE ORGANISATION
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GROWTH AND DEVELOPMENT OF THE ORGANISATION
Table of Contents
Introduction......................................................................................................................................4
LO1: Key considerations for evaluating growth opportunities.......................................................5
Competitive advantage................................................................................................................5
Competitive advantage as a foundation for growth.................................................................5
Porter’s Generic Strategy.........................................................................................................5
PESTLE analysis.....................................................................................................................6
New products and services: innovation.......................................................................................8
Portfolio strategies (Boston Consultancy Group Matrix and GE/Mckinsey matrix)..............8
Growth options............................................................................................................................9
Ansoff’s growth vector matrix.................................................................................................9
Collaboration.............................................................................................................................10
The benefits and drawbacks of collaboration........................................................................10
The benefits of horizontal and vertical integration....................................................................11
Overall Conclusion........................................................................................................................11
Recommendations..........................................................................................................................12
LO2: Role and Importance of SME in the UK economy and its growth......................................13
Investment decision-making......................................................................................................13
The classification of sources of fund.........................................................................................13
The advantages and limitations of fund sources for SME.........................................................14
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LO3: A business plan covering the following areas......................................................................16
Vision and mission for the chosen SME....................................................................................16
Exploring successful entrepreneurial strategies.........................................................................16
The key aspects of a business plan aimed at securing investment and what investors are
looking for.................................................................................................................................17
Aim........................................................................................................................................17
Objective................................................................................................................................17
Budget....................................................................................................................................18
Process of securing funds for the business plan....................................................................20
LO4: Define exit and succession strategy for businesses..............................................................21
The main ways an owner-manager might exit the business......................................................21
The key reasons for business failure and prevention of business failure..................................22
Exit routes or succession planning options for the chosen SME: benefits and drawbacks.......23
References......................................................................................................................................25
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Introduction
In the modern business environment, the small and medium sized enterprise organisations are
gradually becoming more and more productive and gaining a higher market share than the larger
conglomerates. In the context of business environment, an SME can be defined as an
organisation that has less than 250 employees. From this definition, it can be noted that a SME is
not defined in terms of their annual revenue or market share. According to Galbraith et al.
(2017), in 2019, it has been seen that the SMEs has grabbed a total market share of
approximately 51.3% in the UK, which indicates that they highly contribute to the national
economy in the UK.
In this report, the various aspects of Famous Army Stores as an SME in the UK has been
discussed. The Famous Army Stores is a retail store selling camping equipments, footwear,
clothing and army surplus, and is headquartered in Liverpool. This report will analyse the
competitive environment for Famous Army Stores, along with its possible funding sources and
exit strategies. Moreover, and detailed business plan for their future business scale-ups will also
be discussed.
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LO1: Key considerations for evaluating growth opportunities
Competitive advantage
Competitive advantage as a foundation for growth
Omsa, Abdullah and Jamali (2017) opined that in any business environment, the core
competitive advantage in terms of market share, resources and other factors for a company
directly acts as a foundation for their organisational growth and capabilities. The competitive
advantage that Famous Army Stores has in the market of UK can be evaluated using the Porter's
generic strategies and PESTLE analysis of the UK retail market.
Porter’s Generic Strategy
According to Porter's generic strategy, the four possible strategies for Famous Army Stores are:
 Cost leadership strategy: This strategy requires the organisation to reduce the
production cost to a minimum, and reduce the final product or service price while gaining
a reasonable profit.
 Differentiation leadership strategy: According to Abdolshah, Moghimi and Khatibi
(2018), this strategy requires the organisation to develop unique fine-tuned products or
services that attract more customers.
 Cost focus strategy: This strategy needs the organisation to reduce their product or
service cost in a specialised market targeting a specific customer segment.
 Differentiation focus strategy: This strategy requires the organisation to enhance the
uniqueness and efficiency of their products or services to attract a specific customer
segment.
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Figure 1: Porter's generic strategies
(Source: Abdolshah, Moghimi and Khatibi, 2018)
Thus, it can be realised that the most optimal strategy for Famous Army Stores to gain
competitive advantage in the UK market is the differentiation focus strategy, since this will allow
them to attract the specific customer segment of campers with their highest quality and durable
camping equipment products.
PESTLE analysis
The PESTLE analysis of Famous Army Stores in the UK market is:
Macro environmental factors Effects on Famous Army Stores in the UK
market
Political According to Aithal (2016), the political decisions
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of the UK government, such as the tax rebates and
market control policies have to be noted by Famous
Army Stores. In other words, if Famous Army
Stores take this opportunity by aligning their
business policies with these factors, their business
will grow faster.
Economic The economic factors, such as the GDP per capita
of the UK are approximately 44,000 USD, which is
quite high. Thus, it will be better for Famous Army
Stores to optimise their product price with the
purchasing power of the UK residents to maximise
their growth.
Social The social trends in the UK heavily affect the
customer demands of the retail products. Hence, if
Famous Army Stores keeps note of the various
developments in the contemporary social trends,
their business sales figure will be enhanced.
Technological Abbott (2015) opined that the technological
developments of the retail industry are quite
prominent in the UK with the use of RFID tags and
scanners. Hence, Famous Army Stores have to
utilise these technologies in order to grow their
business.
Legal The legal factors in the UK, such as the National
Minimum Wages Act 1998, are the laws that all
companies operating in the retail market have to
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maintain. Thus, Famous Army Stores have to abide
by all these laws and regulations in the UK in order
to enhance their business growth.
Environmental According to Gheibi et al. (2018), the retail
industry is one of the greatest sources of solid
waste, as all the expired products become wastes
that have be properly disposed. Thus, it becomes
efficient for Famous Army Stores if they follow
proper waste disposal system.
Table 1: PESTLE analysis of Famous Army Stores in the UK market
(Source: Learner)
New products and services: innovation
Portfolio strategies (Boston Consultancy Group Matrix and GE/Mckinsey matrix)
The GE MC Kinsey matrix is one of the most effective matrices that help to develop the business
of the new startup companies by expanding the innovation of the product. There are basic
components known as the portfolio that includes MABA analysis. Market attractiveness,
business position and the assessment of the business operations are very important for product
and service innovation. The market size, expected market growth, the pricing strategy and
technology development and degree of competitive advantage are included in the GE matrix. In
the case of the famous army store it can be stated that the target market of the organisation is at
present middle-class population but it can be developed by the help of digital technology. In the
case of digital marketing In the UK market, it has almost 70% effect (Leydesdorff, Heimeriks,
and Rotolo, 2016). Technology like the Customer relationship management may be implemented
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in store so sustainable customer base may be developed. According to the ME matrix, the high
investment should be done in technology and the enhancement of the core competencies of the
company by developing efficient supply chain management (Chandra, 2017). One of the most
important parts is the allocation of the financial resource for the internal development of the
organisation.
Growth options
Ansoff’s growth vector matrix
Ansoff's Matrix includes the four vital components for the proper growth of the company. In the
case of the famous army store that is a small retail organisation must effectively specify the
market development by focusing on the promotional strategies in both physical and digital
media. Stress should be given in digital media for market development as 70 % of the consumers
in the UK are effective only in online mode. One of the major important points is the
diversification of the product. The Diversification may include diversifying the target consumers
for the expansion of business ( Loredana, 2016). The strategy like discounts and online delivery
service and centralized supply chain management is done by Famous army store to target a
broader consumer base. The market segmentation should be done in a perfect manner. New
market penetration strategy should be present that should be enhanced by product development
according to the exact requirement of the consumers. For example, for penetration into an upper-
class market, the famous army store may focus on the high quality and longevity of the different
products like clothes. Moreover, extensive market research may be done to find the exact need of
the market to provide the exact requirement.
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Fig 2: Ansoffs Matrix
(Source: Joyce, and Paquin, 2016)
Collaboration
The benefits and drawbacks of collaboration
The collaboration in business includes the joint ventures and partnership that helps in enhancing
the business process. The main benefits of the collaboration include the ideas of the two
organisation may help to implement effective action plan due to the integration of the staffs of
two organisation. For example, If Famous army store integrates with the marketing company
then the digital marketing idea may be taken from that company to enhance the business growth
(Iivari et al., 2016). Moreover, funding source gets expanded if the enterprises form
collaboration as the funding partners of both companies can fund the collaborative effort.
However, on the other hand, one of the main drawbacks is the cultural difference between the
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two organisations. There might be different working cultures and management culture of the
collaborative company that may hinder the operation management of the collaborative effort.
The benefits of horizontal and vertical integration
The horizontal integration includes the acquisition or merger of two companies of more or less
on the same scale. The industry of operation may be the same or different. If horizontal
integration is done then it may help the Famous army store to lower production cost. Moreover,
horizontal integration may help to enhance product diversity and product innovation ideas by
talking help form the merger company (Mackie, 2018). On the other hand, the vertical
integration includes acquisition of an organisation who is present lower in the supply chain. If
Famous army store acquires a supplier company it should increase the quality of the supply chain
management. The cost of maintaining the supply chain will also decrease by almost 10 %.
Overall Conclusion
The above report has analysed the various business aspects of Famous Army Stores. Its
competitive advantage in the UK market has been analysed with Porter's generic strategies and
PESTLE framework. The possible funding sources of Famous Army Stores has been analysed in
the UK market, and its various possible exit strategies has been designed. Moreover, a detailed
business plan for Famous Army Stores has also been developed.
Recommendations
The recommendations are as below:
 Implementation of Digital technology: digital technology should help in search engine
optimization and enhance database and customer relationship management. Overall
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consumer base may be enhanced by implementing digital technology like CRM and
centralized inventory management for restocking the staffs according to the requirement
 Efficient capacity building: Capacity building of the staffs should be done according to
the requirement. Digital technology and human resource training should be done to
develop the competency of the staffs.
 Market development by extensive research: Elaborate market research should be done
to know the requirement and development of the pricing strategy according to the market
should be done to establish a competitive edge.
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